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FEDERAL COURT INTERPRETATION AND APPLICATION OF CIVIL PRACTICE & REMEDIES CODE SECTION 18.001

Section 18.001 of the Texas Civil Practice and Remedies Code is a powerful tool utilized by plaintiffs in litigation. The statute provides a relatively inexpensive method for a plaintiff to prove up medical expenses in litigation. While the use of Section 18.001 in Texas state courts is considered regular practice, its application in federal courts is currently unresolved.

Under Texas law, the statute is construed to be purely procedural in nature.[1] The characterization as “procedural” has little impact on cases pending in Texas state courts. Federal courts sitting in diversity, however, are only bound to apply Texas laws that are “substantive” in nature. Federal courts are not bound by state laws that are purely procedural in nature.[2] Thus, the distinction between procedural and substantive laws plays a much larger role in federal court litigation.

Federal courts asked to apply Section 18.001 to state law claims are forced determine whether the statute is purely procedural or is substantive enough to mandate its application. Unfortunately, federal courts in Texas are currently divided as to the application of Section 18.001.[3] The Fifth Circuit has not yet resolved the issue.

Southern District of Texas – § 18.001 is Purely Procedural

The Southern District of Texas has held that Section 18.001 is purely procedural and, therefore, not applicable in federal court. The court addressed Section 18.001 affidavits in Akpan v. United States[4]. The Court did not perform and in-depth analysis of Section 18.001. Instead, the Court found persuasive the Texas Supreme Court’s opinion in Haygood v. De Escabedo[5] that Section 18.001 is a purely procedural statute.[6]

Northern District of Texas – § 18.001 May or May Not Apply

The Northern District of Texas is the only federal court in Texas to have ruled that Section 18.001 is both purely procedural and also substantive enough to warrant application. The court’s interpretation of the statute appears to have evolved over time with at least one latter opinion favoring the notion that the statute has no place in federal court.

The court first addressed the issue in 2006 in Rahimi v. U.S.[7] The court analyzed the statute under Erie while noting that the Texas Supreme Court had not yet characterized the statute as procedural or substantive. The court ultimately held that the statute was “so bound up or intertwined” with a litigant’s substantive rights that it is appropriate to apply the state statute in federal court. While this case appears to be the only reported case from the court addressing Section 18.001, at least one other case reached a contrary conclusion.

In Baird v. Shagdarsuren,[8] the court reached the opposite conclusion. The court noted that the Texas Supreme Court had characterized Section 18.001 as purely procedural. The court reasoned that the prior decision in Rahimi decided that the statute should apply in federal court because the Texas Supreme Court had not yet characterized Section 18.001 as procedural. The Baird court was of the opinion that the Texas Supreme Court definitively resolved the inquiry and that the statute was procedural. In reaching its decision the Court noted that several courts within the North District of Texas had reached contrary decisions despite the Texas Supreme Court decision.[9]

Western District of Texas – § 18.001 is Substantive

The Western District of Texas has consistently held that Section 18.001 will apply in federal court diversity litigation. The Western District first addressed the issue in Cruzata v. Wal-Mart Stores Tex., LLC.[10] The Cruzata Court did not perform a lengthy analysis regarding the applicability of Section 18.001. The court noted that the defendants failed to cite to any authority which indicated that Section 18.001 was inapplicable to the case. The court found it persuasive that at least one other federal court[11] had applied the statute.

The issue was again addressed in Rodriguez v. Liberty Mut. Ins.[12] The Rodriguez court addressed Section 18.001 when the issue was presented to it in a motion made expressly for the purpose of determining the applicability of the statute. The court performed an analysis of the statute and even noted the Texas Supreme Court’s designation that the statute was “purely procedural” as well as the Akpan decision by the Southern District of Texas. Nonetheless, the Rodriguez court held that Section 18.001 could be applied in the case. It should be noted, however, that the plaintiff’s motion to apply Section 18.001 was not contested by the defendant. The defendant did not oppose the application of the statute so long as the plaintiff did not use 18.001 affidavits to attempt to prove causation or conclusory damages.

The Western District most recently addressed the statute in 2019 in the case of Grover v. Gov’t Emps. Ins. Co.[13] Again, the court noted the split of authority among federal courts. The court ultimately ruled that the statute should be applied. The court found that Section 18.001 provides a means for a plaintiff to prove its damages and cited to a line of Fifth Circuit opinions holding that, under Erie, state laws that govern how damages are proven are substantive.

Eastern District of Texas – § 18.001 is Substantive

The Eastern District of Texas has held in one case that Section 18.001 must be applied in federal court.[14] In reaching its holding, the court opined that “[a]t a minimum, § 18.001 is so bound up or intertwined with Texas substantive law that federal courts must apply [§] 18.001 to avoid an inequitable administration of the law.”[15] Despite reaching the conclusion that Section 18.001 applies to federal diversity cases, the court ruled that the time limits imposed by rule do not apply in federal court as they are “clearly procedural.”[16]

[1] Haygood v. De Escabedo, 356 S.W.3d 390, 397 (Tex. 2011) (“But this statute is purely procedural, providing for the use of affidavits to streamline proof of the reasonableness and necessity of medical expenses.”).

[2] See Hanna v. Plumer, 380 U.S. 460, 466-67 (1965).

[3] Bagley v. Dollar Tree Stores, No. 1:18-CV-580 (E.D. Tex. December 2, 2019) (“Since the decision in Haygood, federal courts in Texas have been split on the issue of whether § 18.001 is procedural or substantive.”); See Grover v. Gov't Emps. Ins. Co., No. SA-18-CV-00850-FB, 2019 WL 2329321, at *1 (W.D. Tex. May 31, 2019) (observing the split and holding that the statute is substantive); Baird v. Shagdarsuren, No. 3:17-CV-2000-B, 2019 WL 2286084, at *2 (N.D. Tex. May 29, 2019) (citing to Haygood and holding that the statute is procedural); Akpan v. United States, No. CV H-16-2981, 2018 WL 398229, at *3 (S.D. Tex. Jan. 12, 2018) (same); Gorman v. ESA Mgmt., LLC, No. CV 3:17-CV-0792-D, 2018 WL 295793, at *1 (N.D. Tex. Jan. 4, 2018) (substantive); Holland v. United States, No. 3:14-CV-3780-L, 2016 WL 11605952, at *1 (N.D. Tex. July 21, 2016) (procedural); Cruzata v. Wal-Mart Stores Tex., LLC, No. EP-13-CV-00331-FM, 2015 WL 1980719, at *6 (W.D. Tex. May 1, 2015) (substantive).

[4] Akpan v. United States, H-16-2981 (S.D. Tex. January 12, 2018).

[5] Haygood, 356 S.W.3d at 397.

[6] See Akpan, H-16-2981 at 3.

[7] Rahimi v. U.S., 474 F. Supp. 2d 825 (N.D. Tex. 2006).

[8] Baird v. Shagdarsuren, No. 3:17-CV-2000-B (N.D. Tex. May 29, 2019).

[9] Id. (“The Court recognizes that other courts in this district have allowed § 18.001 affidavits after the decision in Haygood. However, only two of these courts acknowledged the Texas Supreme Court’s characterization of § 18.001 as purely procedural. See Gorman v. ESA Mgmt., LLC, 2018 WL 295793, at *1-2 (N.D. Tex. Jan. 4, 2018) (Fitzwater, J.); Butler v. United States, No. 3:15-cv-2969-M, ECF No. 41, at 3-4 (N.D. Tex. June, 2, 2017) (Lynn, C.J.) (order). The court in Gorman only provided a “but see” citation to Holland and Haygood rather than addressing the Texas Supreme Court’s characterization head-on. See Gorman, 2018 WL 295793, at *1. The court in Butler also allowed § 18.001 affidavits and rejected the notion that the Texas Supreme Court’s characterization precludes § 18.001 from applying in federal court. Butler, No. 3:15-cv-2969-M, ECF No. 41, at 3-4.”).

[10] Cruzata v. Wal-Mart Stores Tex., LLC, No. EP-13-CV-00331-FM (W.D. Tex. May 1, 2015).

[11] Rahimi v. United States, 474 F. Supp. 2d 825, 829 (N.D. Tex. 2006).

[12] Rodriguez v. Liberty Mut. Ins., No. SA-17-CV-928-XR (W.D. Tex. Oct. 3, 2018).

[13] Grover v. Gov’t Emps. Ins. Co., No. SA-18-CV-00850-F (W.D. Tex. May 31, 2019).

[14] Bagley v. Dollar Tree Stores, No. 1:18-CV-580 (E.D. Tex. Dec. 2, 2019).

[15] Id. (internal quotations and citations omitted).

[16] Id.

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